Jonah Goldberg / October 18, 2019

For This President, Alliances Are Strictly Business

“Integrity lowers the price of capital.” An extremely successful investor once told me that.

“Integrity lowers the price of capital.”

An extremely successful investor once told me that. The context at the time was Donald Trump’s impending takeover of the GOP. This person meant it as an investment rule, an insight into Trump and a life lesson.

The investment part is easy. Say you run a bank. Two people each want a loan. The first person is a pillar of the community. You’ve worked with him a dozen times before and he’s always been straight shooter, even when he legally didn’t have to be. The times he had trouble making a payment, he called you well in advance, explained the situation honestly and went to extraordinary lengths to honor his commitments.

You know the second applicant only by reputation. He’s known around town as sharp but also a bit shady. He’s successful, but he’s weaseled out of commitments. He’s the kind of guy who says the check’s in the mail when it isn’t and cuts corners when he can. He’s left a trail of partners holding the bag because, hell, “it’s just business.”

All else being equal, who are you more inclined to lend money or charge a lower interest rate? The man with integrity, because integrity mitigates risk. And risk is what determines the cost of capital. It’s why government-backed bonds pay a lower interest rate than high-risk “junk” bonds.

This same principle applies to hiring and promoting people. Whether babysitters or top executives, employees who’ve showed up, worked hard and earned trust are a less risky bet. It’s not just boilerplate when employers talk about “investing” in their workers.

As my friend explained, there was a reason Trump had so much difficulty raising money from traditional sources. He had a record of using bankruptcy laws to get out of debts. He broke promises as a business strategy. He left lenders and contractors alike holding the bag. After all, “it’s just business.”

Which brings me to the life lesson. This same basic principle is a good one in all the parts of life that can’t easily or obviously be reduced to financial transactions. If you treat others fairly, honors commitments and do kindnesses — call them favors — when you can, it’s more likely that people will treat you the same way. One good turn deserves another.

This sort of reciprocity is what makes friendships and communities healthy, because it increases what social scientists call “social trust” and “social capital.” Healthy communities are places where people show up for the potluck dinners and donate to the food drives, even when they may not want to.

It’s dangerous to apply local or personal principles to the national. Such thinking is at the core of ideologies like socialism and nationalism, which hold that countries should behave like a family or small group of neighbors. It’s even worse when you try to extrapolate to the whole planet. The rules of the international order are not the same as the rules of the nation, never mind the family.

Still, there’s some relevance. Oscar Wilde famously said that a cynic is someone who knows the price of everything but the value of nothing. President Trump talks a lot about the price of our relationships and commitments around the world. (They’re playing us for suckers!) He’s often wrong on the facts, but sometimes he has a point. But he never talks about, or even acknowledges, the value of these things.

In Hong Kong, protestors risk death or prison by waving American flags on the assumption that America actually meant it when we said we were friends to those seeking freedom. Syrian Kurds fought by our side in the battle against ISIS at least in part because they took American integrity seriously. Our allies have sent troops to fight in our battles even when it wasn’t in their narrow self-interest to do so. For instance, Australia hasn’t fought by our side in every major military engagement since World War I out of a philosophy of “Australia First.” The Australians did it because they value our friendship and believe that national honor — ours and theirs — requires more than a mere cost-benefit analysis.

Trump heaps praise on nations that reject our values while disparaging those that share them. His definition of national honor, or “greatness,” puts no value in our commitments — to other nations or to American ideals — while putting a price on everything. Promises are just things you say to maximize profit. After all, it’s just business, and integrity’s got nothing to do with it.


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